Ibe Kachikwu, Nigerian Minister of state for Petroleum
Nigeria will be seeking a six-month extension of the exemption it got from the production freeze agreement reached by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members in December 2016 to shore up oil prices.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, disclosed this on Wednesday at a briefing with journalists in Houston, Texas, venue of the 2017 edition of the annual Offshore Technology Conference (OTC).
He also said he was optimistic that OPEC and non-OPEC members would agree to the freeze extension, in addition to initiating talks with oil producers in the United States and Canada to join OPEC’s attempt to stabilise oil prices.
Thirteen OPEC members and 11 non-OPEC countries led by Russia agreed on November 30, 2016 to reduce their production outputs by about 1.8 million barrels per day (bpd) for six months beginning from January 2017, in an effort to drain the crude oil glut that had depressed prices for over two years.
The two blocs also agreed to allow countries like Nigeria, Iran and Libya, which had experienced repeated disruptions to their production to be exempted from the deal.
With the exemption from the production freeze, Nigeria has seen its production, which dropped to an average of 700,000 barrels per day (bpd) on account of militant attacks in the oil-rich Niger Delta, rise to 2 million barrels per day (mbpd).
But as the expiration of the freeze draws near and with OPEC due to meet on May 24 in Vienna, Austria, to take a decision on whether to extend the deal or not, Kachikwu stated that he had strong convictions that the agreement would be extended and Nigeria also exempted.
His conviction, notwithstanding, the production freeze has also come with recommendations from different quarters for OPEC to extend the deal for another six months from June.
“The indication that I have so far is that there is a willingness to extending that,” said Kachikwu when he was asked about the possibility of the extension happening.
He further stated: “I expect we (Nigeria) will get OPEC exemption, but one year from now, will it be renewed? I am not too sure.”
The minister backed his push for an extension of Nigeria’s exemption from the deal with claims that the country will need a little more time to complete a number of critical export pipelines, some of which he said were nearing completion.
“Over and above extending, we need to continue to engage. We need to find a way to stabilise international oil prices, otherwise everybody will lose out,” he added.
He maintained that producers in the US and Canada would have to come to the table with OPEC and non-OPEC members because at the end of the day a lot of investments are at stake.
Also, he revealed that the federal government, Shell and the Nigerian Agip Exploration Limited (NAE) will go ahead with the $13.5 billion Zabazaba deepwater project located in Oil Prospecting Lease (OPL) 245 despite the controversies and corruption allegations surrounding the oil block.
Kachikwu said that the project will go on as scheduled by the partners, adding that the protracted dispute over the block with Malabu Oil and Gas Limited would not affect it.
According to Kachikwu, his ministry will not flag down the project on account of the dispute, because its continuation had nothing to do with it.
Kachikwu also disclosed that partners in the Nigerian Liquefied Natural Gas (NLNG) Limited are expected to take a Final Investment Decision (FID) on the company’s seventh train, which when completed would lift the capacity of the plant to 30 metric tonnes per annum (mtpa).
The Zabazaba deepwater is a Greenfield offshore project located in the eastern portion of the Niger Delta in water depths ranging from 1,200 to 2,400 metres.
The oil field is believed to hold 9 billion oil reserves, which will make it one of the most prolific fields when it comes on stream.
The minister however stated: “Malabu continues to be a worry, it happened before this administration and it is in court.
“This matter is being handled not just in Nigeria, action is going on in France and some other countries, the facts are there. As a lawyer with years of experience I try not to comment on this.
“There is a difference between recovering the illegal payments and dealing with those claiming to be beneficiaries of the block itself. The Zabazaba and other projects that have been signed on would have to go on.
“That has nothing to do with recovering the money. In recovering the money, we should keep trailing the money and get it.
“One of the things I have said to companies that are involved in this, is that for me once there is a question mark in terms of a transaction you did, we will still look at it, and then you need to come clean to the table.
“My simple reading is that if there is $1 billion that was paid illegally, that is $1 billion the federal government should have gotten if you didn’t do illegal bribe.”
Kachikwu added: “In the next coming months, we are going to be sitting down, different from what the EFCC is doing to say we need to talk because two things will happen without any impact in terms of the project which must continue because these are huge billions of dollars of investments coming to Nigeria, so I am not going to shut that down.”
Pressed for further explanation on this, Kachikwu stated: “The issue of the criminality is outside my realm. My realm is doing two things: make sure the investment goes ahead so we can get returns, and two, get back the $1 billion from wherever they said they have put it and give me back the money so that the federal government can have it back.
“But if in fact, there are question marks, as it is almost becoming apparent from all the data that we see that monies were paid, so we will need to sit down with them.
“For me as a business man, there is $1 billion that is lying out there, paid to the wrong person, so we need to see how we can get that $1 billion and therefore give the IOCs a clean bill of health.”
On the NLNG Train-7, the minister explained that within the next 18 months, partners should sign the FID to enable the project proceed.
He suggested that the government’s recent part-payment of the joint venture cash call debt to the international oil companies (IOCs) would also boost the confidence of NLNG investors to proceed with the FID.
Source: This Day